Jump to content
House Price Crash Forum
Sign in to follow this  
Shotoflight

Tipping Point

Recommended Posts

OK, so I have shamelessly nicked this from the main Forum, but if you have missed it, please give the article - and importantly - the comments 5 minutes of your time. This will have an impact on sentiment, for sellers and buyers, and will impact NI in very short order - irrespective of whether our local 'professionals' have or have not the business nous to follow suit.

After all the talk, we are about to find out exactly what a buyers market looks like.

Ratner the jeweller famously called his customers stupid for buying overpriced crap. Customers were shaken from their naievty, gullability, complacency and their buy-in to the marketing hype - they were confronted with reality (from the horses mouth - the important bit) and voted with their wallets and feet. Buyers, mostly, don't like to be told they are mugs for overpaying.

Rightmove have reached tipping point and is telling sellers (and importantly Estate Agents) to get real and drop prices

They've tried every other trick in the book and have now, belatedly realised that "Money talks and BullS*it walks". Have they left it too late to save themselves? Be very clear, this is a last gasp self preservation/ survival strategy.

This is what I have been waiting for and, as far as I'm concerned, It's game on. Or as EA's will come to call it - A Code Red. Enjoy.

http://www.estateagenttoday.co.uk/news_features/Get-real-on-house-prices-Rightmove-tells-sellers

Rightmove’s July House Price Index revealed that 70% of properties brought to market in the first six months of 2011 were still up for sale.

Rightmove is looking to educate sellers via a campaign landing page with an informative video guide. It will also be supporting the campaign with radio and online advertising.

Rightmove is currently in the process of contacting each member agent with full details about the campaign, and information about the products being credited to their account.

Share this post


Link to post
Share on other sites

Who nicked it from this forum yesterday:

http://www.housepric...howtopic=166923

No hard feelings towards Sibley's BC though - his presence (& support!) over on EA Today is most appreciated.

Yip, the original thread is also worth a read, and I should have linked it for completeness.

Hints of interest rate rises, or actual rises, just after Christmas (5 months away) would be the icing on the cake. A matter of when, not if.

Share this post


Link to post
Share on other sites

OK, so I have shamelessly nicked this from the main Forum, but if you have missed it, please give the article - and importantly - the comments 5 minutes of your time. This will have an impact on sentiment, for sellers and buyers, and will impact NI in very short order - irrespective of whether our local 'professionals' have or have not the business nous to follow suit.

After all the talk, we are about to find out exactly what a buyers market looks like.

Ratner the jeweller famously called his customers stupid for buying overpriced crap. Customers were shaken from their naievty, gullability, complacency and their buy-in to the marketing hype - they were confronted with reality (from the horses mouth - the important bit) and voted with their wallets and feet. Buyers, mostly, don't like to be told they are mugs for overpaying.

Rightmove have reached tipping point and is telling sellers (and importantly Estate Agents) to get real and drop prices

They've tried every other trick in the book and have now, belatedly realised that "Money talks and BullS*it walks". Have they left it too late to save themselves? Be very clear, this is a last gasp self preservation/ survival strategy.

This is what I have been waiting for and, as far as I'm concerned, It's game on. Or as EA's will come to call it - A Code Red. Enjoy.

http://www.estateagenttoday.co.uk/news_features/Get-real-on-house-prices-Rightmove-tells-sellers

Rightmove’s July House Price Index revealed that 70% of properties brought to market in the first six months of 2011 were still up for sale.

Rightmove is looking to educate sellers via a campaign landing page with an informative video guide. It will also be supporting the campaign with radio and online advertising.

Rightmove is currently in the process of contacting each member agent with full details about the campaign, and information about the products being credited to their account.

Wish I could agree with you Shotoflight, but if you mean a capitulation type event in house prices, I'm not so sure this is a big enough catalyst to represent a tipping point in those terms. Could be very significant however in attempting to change vendor sentiment but there was a recent report suggesting that a large proportion of sales fell through because the vendor pulled out. So in my view there there is not enough forced selling yet to get prices down to affordable levels and what we are seeing in the housing market is just a reflection of the current world-wide debt management strategy of extend and pretend. Everywhere you look, nobody wants to open this can of worms and deal with it. Vendors (like politicians) are just buying time, hoping somehow this can all be resolved without too much pain - and so we get more calls for more QE. I think prices will only come down quickly if the markets force base rates to 5-6%. Must be the UK's turn soon to come under scrutiny, those ambitious plans for deficit reduction relied on rather optimistic forecasts for growth which don't seem to be materialising. How long before the markets decide that ain't good enough?

Share this post


Link to post
Share on other sites

Wish I could agree with you Shotoflight, but if you mean a capitulation type event in house prices, I'm not so sure this is a big enough catalyst to represent a tipping point in those terms. Could be very significant however in attempting to change vendor sentiment but there was a recent report suggesting that a large proportion of sales fell through because the vendor pulled out. So in my view there there is not enough forced selling yet to get prices down to affordable levels and what we are seeing in the housing market is just a reflection of the current world-wide debt management strategy of extend and pretend. Everywhere you look, nobody wants to open this can of worms and deal with it. Vendors (like politicians) are just buying time, hoping somehow this can all be resolved without too much pain - and so we get more calls for more QE. I think prices will only come down quickly if the markets force base rates to 5-6%. Must be the UK's turn soon to come under scrutiny, those ambitious plans for deficit reduction relied on rather optimistic forecasts for growth which don't seem to be materialising. How long before the markets decide that ain't good enough?

I maintain that when EA's and sellers agree, or are made to realise, that what they are selling is overpriced, then the tide has turned. I don't know how fast it will be and yes interest rates of 5-6% would certainly speed things up. On all other scales - OECD, Economist, average salary etc etc houses are still at least 20% overvalued and as the BBc reported the variance in asking and selling price is up to 45%. So there is a large gap to be closed.

Whilst any interest rate (even .25%) may be months away, the initial act will be more effective than the rate ie it announces the direction of travel and it isn't downwards. The longer they hold on, the starker that message will be. However, i would be wary of the impact of small step increases. It will be uncomfortable for many but they have had long enough to prepare for it. There is also no guarantee banks will pass on .25 increases if they have enough margins on say current 4.4% SVRs with Govt pressure and perhaps a little competition.

The main impact will be on those that are on IO or base rate trackers (lifetime) and I assume the trackers are a dwindling % of the overall market.

So I won't hold my breath on 6% interest rates, and their speedy effects on prices, any time soon.

Interest rates are only one side of the affordability coin however. And the other side is equally, or perhaps more painful.

Now that IO, self cert and low deposit mortgages have gone the way of the dodo, alongside many an investor - the real world has intervened. Potential mortgage debtors must show they can save and repay the loan over the next 25 years, and convince themselves it is worth it (the property and the risk). The NI economic thread is frightening so I won't rehash except to highlight inflation and job security. Confidence and sentiment have turned negative. It will be a long time before you see people in sleeping bags outside EA's again, competing for off plan flats. We've been warned we are going back to the 70s with 4 more years to go (all things being equal!)

It is in this environment that the largest advertiser of houses in GB has told sellers and agents that what they are selling is overpriced and they will now actively campaign to have these prices reduced (mainly for their benefit, it has to be said). I hope it works for them and that they sell more houses, at lower prices.

I'm not sure how much forced selling one needs for a functioning market but buyers and sellers agreeing on a house's worth is a good start and the sellers are being reeled closer to the buyers estimation as every day passes. It's how they will sell their house. If they want to.

Banks are lending (responsibly), there will be no return to 'normal' any time soon and the spring bounce didn't happen.

So tipping point or tide turning yes. Capitulation, no - but going in the right direction, yes. Who knows what's around the corner - look what's happened in the past couple of years?

Share this post


Link to post
Share on other sites

I maintain that when EA's and sellers agree, or are made to realise, that what they are selling is overpriced, then the tide has turned. I don't know how fast it will be and yes interest rates of 5-6% would certainly speed things up. On all other scales - OECD, Economist, average salary etc etc houses are still at least 20% overvalued and as the BBc reported the variance in asking and selling price is up to 45%. So there is a large gap to be closed.

Whilst any interest rate (even .25%) may be months away, the initial act will be more effective than the rate ie it announces the direction of travel and it isn't downwards. The longer they hold on, the starker that message will be. However, i would be wary of the impact of small step increases. It will be uncomfortable for many but they have had long enough to prepare for it. There is also no guarantee banks will pass on .25 increases if they have enough margins on say current 4.4% SVRs with Govt pressure and perhaps a little competition.

The main impact will be on those that are on IO or base rate trackers (lifetime) and I assume the trackers are a dwindling % of the overall market.

So I won't hold my breath on 6% interest rates, and their speedy effects on prices, any time soon.

Interest rates are only one side of the affordability coin however. And the other side is equally, or perhaps more painful.

Now that IO, self cert and low deposit mortgages have gone the way of the dodo, alongside many an investor - the real world has intervened. Potential mortgage debtors must show they can save and repay the loan over the next 25 years, and convince themselves it is worth it (the property and the risk). The NI economic thread is frightening so I won't rehash except to highlight inflation and job security. Confidence and sentiment have turned negative. It will be a long time before you see people in sleeping bags outside EA's again, competing for off plan flats. We've been warned we are going back to the 70s with 4 more years to go (all things being equal!)

It is in this environment that the largest advertiser of houses in GB has told sellers and agents that what they are selling is overpriced and they will now actively campaign to have these prices reduced (mainly for their benefit, it has to be said). I hope it works for them and that they sell more houses, at lower prices.

I'm not sure how much forced selling one needs for a functioning market but buyers and sellers agreeing on a house's worth is a good start and the sellers are being reeled closer to the buyers estimation as every day passes. It's how they will sell their house. If they want to.

Banks are lending (responsibly), there will be no return to 'normal' any time soon and the spring bounce didn't happen.

So tipping point or tide turning yes. Capitulation, no - but going in the right direction, yes. Who knows what's around the corner - look what's happened in the past couple of years?

You make your point well as usual and yes, many indicators in the UK market now show a clear reversal in price trend. So I can easily accept that the tide has turned (again) in the UK but we seem to agree that we haven't got to capitulation just yet which was how I was interpreting your 'tipping point' terminology. Maybe we will get a head of steam to make vendors more motivated from the cumulative effect of all the other negative economic factors without needing a rate rise as well and as you often point out, there's particularly nothing much to cheer about in the NI economy in the short/medium future.

I get fed up with this waiting game sometimes but then every so often another £100k gets chopped of the asking price of a £500k house that was once £600k house that was once an £700k house and it reminds of what to expect when vendors generally begin to get serious about finding the market value of their property.

But for now I'm resigned to having to spend another winter renting.

Share this post


Link to post
Share on other sites

If Rightmove is the new Demi God on property then they have performed a U turn since this post started.

Consumers forecasting house price stability reaches highest level [Rightmove] Monday, July 25, 2011

My link

I haven't read it all as I don't believe or place much weight on the likes of it. However, it shows how you can't hinge a turning point on what they come out with as they will have the opposite view the next day.

Share this post


Link to post
Share on other sites

If Rightmove is the new Demi God on property then they have performed a U turn since this post started.

Consumers forecasting house price stability reaches highest level [Rightmove] Monday, July 25, 2011

My link

I haven't read it all as I don't believe or place much weight on the likes of it. However, it shows how you can't hinge a turning point on what they come out with as they will have the opposite view the next day.

Without getting into what weight can be properly attached to the reports, I don't think they should be so easily dismissed for the reasons you suggest. As I read it, their consumer survey report simply reflected the same imbalances between seller expectations and market realities as their latest initiative seeks to address by encouraging lower asking prices.

I don't really see the degree of volte-face you accuse them of.

Share this post


Link to post
Share on other sites

If Rightmove is the new Demi God on property then they have performed a U turn since this post started.

Consumers forecasting house price stability reaches highest level [Rightmove] Monday, July 25, 2011

My link

I haven't read it all as I don't believe or place much weight on the likes of it. However, it shows how you can't hinge a turning point on what they come out with as they will have the opposite view the next day.

Perhaps not a Demi God, but they should be in a position to see if what they sell (or don't) is unrealistically priced amongst other things. I've never known them to call for lower prices.

Imagine if Property News or a large EA over here stated the majority of properties needed to drop asking prices, and campaigned for it. Nationwide figures already put the reality gap at 41% so it's nothing special - just the source.

http://www.bbc.co.uk/news/business-14183649

Lets see what effect their campaign has - they appear determined to follow it through, irrespective of consumer surveys. if anything, the survey shows the need for the campaign.

Edited by Shotoflight

Share this post


Link to post
Share on other sites

Imagine if Property News or a large EA over here stated the majority of properties needed to drop asking prices, and campaigned for it. Nationwide figures already put the reality gap at 41% so it's nothing special - just the source.

I believe you are reading something into this 41% gap that is not there. As we all know houses at the lower end of the price scale, sub £150k. The more expensive houses, over £200 are slower to sell as they involve a chain etc. When most of these surveys are issued they use a grouping to avoid distortion. However, I am not at all surprised that the average asking price is well above the average selling price as the lower priced houses could be outselling those above by 4 or 5 to 1.

Share this post


Link to post
Share on other sites

I believe you are reading something into this 41% gap that is not there. As we all know houses at the lower end of the price scale, sub £150k. The more expensive houses, over £200 are slower to sell as they involve a chain etc. When most of these surveys are issued they use a grouping to avoid distortion. However, I am not at all surprised that the average asking price is well above the average selling price as the lower priced houses could be outselling those above by 4 or 5 to 1.

I would suggest the £150k and above are also overpriced, from my observations - resellers mainly that is - slower to face reality. The point is the lower end (below £100k) where I am is moving slowly at RV or below because Reeds Rains is pushing them, repoed, and a few amatuer investors are bailing out before it gets worse.

I agree on the 41%, just used Nationwide cause I thought you liked them - seems none of them's perfect. Other stats say those that do sell get anything from 88% to 95% of asking, depending on who you listen to (though not necessarily comparing like with like - ie unsold overhang excluded).

Finally lower to higher 5 to 1 ratio - surely this is not a properly functioning market and cannot last. Hence the push for the stubborn over £200ks to reduce prices realistically, if they want to sell. The average house here takes 9 months to sell (if at all) against the UK 9 week average. Surely we need to get real quicker than anyone.

I'll stick to my guns, when Rightmove says property prices must drop (presumably because they are worried - self interest), and pursue this with an ongoing campaign, I think it is a big deal and will have ramifications.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.